Cotton falls after poor export sales report

General Comments: Futures were higher on reduced offers from just about everywhere and on speculative fund buying before the index fund rebalancing this week that should fine the index funds buying a lot of Coffee. There was little interest noted by producers or roasters in any trading. Central American differentials are turning firmer now as northern South America offers are much harder to find. Many Central American producers and mills are out of the market. Vietnamese differentials have been weaker, and reports indicate that offers of Robusta have increased at least a little bit, but that offers remain small in general. None of the Coffee has hit London yet in terms of certified stocks. The increased Robusta offer should hurt Arabica demand, as roasters will find it easier to buy the Robusta for the blends. Weather is reported to be good in all areas.

Overnight News: Certified stocks are lower today and are about 2.704 million bags. The ICO composite price is now 108.08 ct/lb. Brazil will get dry conditions. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry weather although some light precipitation is possible. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 113.00, 112.00, and 110.00 March, and resistance is at 118.00, 120.00 and 122.00 March. Trends in London are mixed to down with objectives of 1600 March. Support is at 1600, 1570, and 1540 March, and resistance is at 1670, 1690, and 1730 March. Trends in Sao Paulo are mixed. Support is at 136.00, 135.00, and 131.00 March, and resistance is at 142.50, 145.00, and 146.00 March.

General Comments: Futures were lower in moderate volume trading. It was mostly a consolidation trade with little news around to affect the markets. The New York market seems to have found a short term trading range between 1600 and 1650 March. The primary focus of the market remains big supplies. Strong offers from India and Thailand keep overall trends down. The big offer from Brazil and the big harvest there is starting to wind down as mills start to shut down for the season. Thai offers are stable as the harvest is very active there and differentials have been steady to lower. India was very active earlier but seems more quiet now and there are some reports of production losses there. Also, there has been a dispute between producers and industry there on prices, and the government is stepping in to help the industry as it has mandated higher prices for producers. Demand might be getting better, but still have not been able to change the trend much. Weather conditions in key production areas around the world are rated as mostly good.

Overnight News: Brazil could see dry days and near to above normal temperatures.

Chart Trends: Trends in New York are mixed. Support is at 1610, 1590, and 1580 March, and resistance is at 1650, 1685, and 1725 March. Trends in London are mixed. Support is at 440.00, 436.00, and 432.00 March, and resistance is at 445.00, 450.00, and 454.00 March.

General Comments: Futures closed higher in New York and in London in recovery trading despite increased certified stocks in New York. Charts show that trends are mostly down for the short term despite the very strong Price action on Friday. Industry will probably be more active in buying now that the new year has started. On the other hand, index funds could do some selling as Cocoa has been one of the stronger performers in the past year and the funds might need to sell a little to help balance portfolios. Much of West Africa is reporting that arrivals and purchases have been strong and above last year. The overall fundamental picture should support generally strong prices as the supply situation should be tight on strong demand for the longer term. Ideas are that demand can remain above production for at least the next couple of years. Much of the increased demand should come from Asia. A good midcrop production is expected in the Spring from Africa as weather now is good for the mid crop development. Asian growing conditions are reported to be good.

Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see scattered showers. Temperatures should average near to above normal. Brazil will get dry conditions and near normal temperatures. ICE certified stocks are lower today at 3.551 million bags.

Chart Trends: Trends in New York are mixed to down with objectives of 2600 and 2450 March. Support is at 2630, 2580, and 2570 March, with resistance at 2730, 2740, and 2765 March. Trends in London are mixed to down with objectives of 1650 March. Support is at 1680, 1660, and 1640 March, with resistance at 1730, 1750, and 1765 March.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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